Example. 13. In this example the person has explained risk management in terms of var used and _ assured the client _ that it adequately covers risk monitoring.
And this is a violation cause the employee didn’t explain that var results would vary with assumptions.
Does this standard require that you explain models employed for investment management or risk management be explained _ in detail _ to clients then?
you don’t have to provide a detailed explanation, but you have to explain what VaR is (along with anything that the client might not understand) and the basic concepts behind it.
one way to do this is by providing a glossary together with each report/statements.
Thanks. In the explanation they mention this is a violation cause the employee didn’t explain that changing inputs in var can change risk considerably, despite having explained that the chosen level has been a standard practice.